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Opinion
David Fickling

Opec and Russia Best Not Poke the Shale Oil Bear

U.S. exports could upset the math behind this production increase.

A pumpjack at the Bakken Formation, North Dakota.

A pumpjack at the Bakken Formation, North Dakota.

Photographer: Daniel Acker/Bloomberg
Corrected

Here’s one underreported factor that may explain Russian and Saudi Arabian willingness to turn their backs on almost 18 months of Opec oil supply cuts — the spread between Brent crude and West Texas Intermediate has reached its widest level in three years:

The simple reason for this is that the shale oil boom has left crude sloshing around the U.S., resulting in a local oversupply. While Brent prices have risen some 14 percent over the past three months, WTI is up just 7.5 percent and Midland crude — the version of WTI priced in the booming Permian basin rather than the benchmark delivery point in Cushing, Oklahoma — is down 4.8 percent.